As Hackers Steal $100 Million From Binance, Nigeria Crypto Investors Ponder Risks

As Hackers Steal $100 Million From Binance, Nigeria Crypto Investors Ponder Risks

By Chibuike Osigwe

Binance, the world’s largest cryptocurrency exchange, said hackers stole around $100 million worth of its BNB cryptocurrency last night , down from earlier estimates of more than $500 million, sending jitters down the spine of Nigerian investors about the risks of cryptocurrency investments.

The hackers tricked the blockchain protocol, exploiting weaknesses to get it to produce more coins in an attempt to drain as much as 560 million dollars of digital coins from the world’s biggest cryptocurrency exchange. It is estimated that between 100 million and 130 million dollars worth of coins were successfully siphoned, forcing Binance to suspend all network transactions.

“An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB,” Binance Chief Executive Officer Changpeng Zhao (CZ) posted to Twitter. “We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly.”

Some $7 million of the BNB created by the hackers has already been frozen, he said.

Nigerians are among the biggest users of the Binance exchange, with Zhao once describing the “Nigerian community” as one “that brings me great pride.”

Many Nigerians have in recent years taken to investing in crypto currencies as a hedge against spiralling inflation and a relentless depreciation in the value of the naira. The Central Bank of Nigeria last year barred the country’s banks from transacting with crypto exchanges to curb exchange-rate pressures

A lot of crypto analysts pointed to Binance’s over-centralization and shortage of validators — a computer program that checks transactions, verifies activity, votes on outcomes, and maintains records — as the cause of the loophole in the attack. While the Binance some rivals have as much as 400,000 validators.

According to Comparitech’s cryptocurrency heist tracker, the BNB exploit is the fifth largest crypto heist of 2022 after Ronin Bridge ($620 million), Wormhole Bridge ($326 million), Nomad ($190 million)and Harmony Protocol ($100 million). The total loss of cryptos to cyber criminals in 2022 comes to $2.4 billion, spread across approximately 130 separate attacks with most of them exploited via cross-chain bridges. Last year, 132 separate incidents cost a total of $2.74 billion according to Comparitech crypto tracker.

BNB has lost over 3% in the last 24 hours following the attack. However, the Binance Smart Chain was later restored from suspension as Binance pursues the recovery of the stolen coins.